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Several months back, I mentioned to my wife how impressed I was by Google’s Nexus 7 tablet. But this impression was based on paper -- on videos I saw and reviews I read online. I hadn't actually seen the device in person. So when she asked if that’s what I wanted for my birthday last month, I was unsure.

For as fond as I am for Android-based devices, I just didn't know where it would fit in my life. We already have the Motorola Xoom, a 10-inch Android tablet that still ran very well more than a year and a half after purchase. So for home, there was that and my notebook PC. On the go, I had the beastly Samsung Galaxy S3.

Still, I couldn't think of anything else I really wanted so I told her the Nexus 7 would do just fine. If nothing else, it would replace my phone as my nighttime reading and official Breaking Bad episode catch-up device. Yet after just three weeks, it has become a fully integrated part of my daily life and my de facto media consumption device.

Now, I’m usually not one to underestimate the utility of electronic products. In fact, quite the opposite. I usually build up my expectations to the point of disappointment. But the Nexus 7 exceeded my expectations is just about every important way possible.

Perhaps more than anything else was just how portable I found the Nexus 7 to be. It’s far smaller than my 10-inch Xoom, which now looks and feels like a brick compared to it. Indeed, the 7-inch screen size may just be my sweet spot. It’s the perfect size for reading books, more than adequate for watching movies in high definition, and big enough to surf Web sites in full desktop view. Games look great on it and I could finally read my eComics without having to zoom in on dialogue bubbles, which really takes away from the viewing experience. Typing was a pleasure, especially in portrait view since I didn't have to stretch my fingers to reach certain letters on the keyboard. The small form factor really makes it easy to carry with you at all times, which I now do.

The screen is also beautiful. To be perfectly frank, I was disappointed by the display on the Xoom. Despite its 1280x800 HD screen, contrast levels were average at best and there was a slight grainy look to pictures and videos. This was fine when Web surfing and checking email, but somewhat disappointing when viewing YouTube videos even in HD. The display on the Nexus 7 is infinitely better. It has the same resolution as the Xoom but noticeably better pixel density due to its smaller display size. Everything looks crisp, especially text when reading books. No, it may not be on par with Apple’s retina display, but as far as tablets within this size go, I defy you to find one with a sharper screen.

Of course screen and portability mean little if the user experience is subpar. Fortunately, here’s where the Nexus 7 really shines. Armed with Nvidia’s Tegra 3 quad-core processor and Google’s most up-to-date version of its Android operating system, the tablet represents the smoothest user experience I've ever seen on an Android-based device. There is literally no lag while navigating through multiple home screens, launching apps, Web browsing and watching HD videos. The tablet comes with a fully-integrated suite of Google apps, such as Gmail, Maps, YouTube and the Play Store (i.e. app store). It also includes Google Books, Google Movies and Google Music, which allow for easy purchase, download/streaming of an extensive selection of content. Everything syncs seamlessly with my Google account, meaning I can start reading a book on my phone and pickup where I left off on the Nexus 7. It may not be as robust or full featured as what is available in Apple’s more mature media ecosystem, but it does the job quite well.

The Nexus 7 also includes Google’s amazingly quick and accurate voice search, which in its newest iteration runs circles around Apple’s Siri. Not to mention, it has a nicer voice to boot. Then there’s Google Now -- a feature that really needs to be seen to be believed. Have a habit of searching for a couple of stock tickers online? Google Now will remember you did so and will have those prices waiting. After a couple of trips to the office and back, Google Now will learn your route and inform you how long your commute will take and have that info ready for you every morning. You can get similar notifications for sports scores to your favorite team, flight information, weather, appointments, movies, etc. The best part is, it gets better every day because it learns from your Web searches, locations and other ways you use your Google-linked apps. Its ability to truly anticipate your needs is the key reason why it was named innovation of the year by Popular Sciencelast month.

I know what you’re thinking. It’s great that you like your little device, but what the heck does this have to do with stocks? Well, if you own Apple, plenty. Because based on my experience with the Nexus 7, I honestly believe Apple is in trouble. Now, I use the term “trouble” loosely here. Apple’s revenues will likely continue to grow at a high clip for the foreseeable future. Its iPhones will still command a significant share of the smartphone market and its iPads will still be among the hottest gifts this holiday season.

But the value in Apple shares has always been more about future expectations versus current demand. Even as Android-based phones have overtaken the iPhone in global market share, those future expectations looked pretty darn bright entering 2012 with its thoroughly dominant share of the global tablet market. But as the year has progressed, Android tablets have become much more competitive. Refinements in the Android operating system, advances in hardware, growth in the number of apps optimized for tablets, multiple form factors, and cheaper price points have resulted in better demand for Android-based tablets than many expected. Nowhere is this more apparent than in the Nexus 7.

Nevertheless, many have looked towards the iPad Mini to change the tide -- to swing the tablet momentum back in Apple’s favor. But this will be tough to do. Unlike the iPhone and the original iPad, Apple was not the first entrant in the ultra-portable tablet market. Its late entrance, however, would be forgivable if the reason for the tardiness was to produce a product that was head and shoulders better than any competing product currently available.

Sadly, that wasn't the case. In fact, spec-for-spec, the Nexus 7 out classes the iPad Mini in many key categories, including housing a newer generation and faster processor and a higher resolution screen. The main advantages of the iPad Mini are the quality of the build, its more robust media ecosystem and larger selection of apps optimized for tablets. But is that really enough to sway the average consumer?

I've read many reviews of the iPad Mini suggesting that you shouldn't compare it with similar sized Android tablets, but rather, you should compare it to the larger full-sized iPad. From a consumer standpoint, that’s fine. But from a business standpoint, that’s terrible. Why? Because it tells me that it will most appeal to those who have already decided on buying an iPad or are already enamored with Apple products. At best, it’ll result in growth in sales from existing customers. At worst, it’ll result in sales cannibalization. Yet for Apple to continue growing at a rapid rate, it needs to expand its user base. That means it needs to compete for new tablet buyers. The Nexus 7 and products like it will make this far tougher to do going forward.

Brand equity certainly has heft. And there will always be consumers that are willing to pay up for better build quality and a more seasoned media ecosystem. But with the iPad Mini, Apple may have overestimated the value the average consumer places on these two factors. After all, it’s not like the Nexus 7 is made of straw. While it may not be cased in aluminum, I doubt most consumers would view the construction as cheap or of low quality in anyway. And while Google’s Play Store may not be as robust or refined as Apple’s Appstore, its offerings are pretty compelling, constantly expanding, and sync seamlessly with ones Google account. In my view, neither is nearly inferior enough to justify paying $130 or 65% more for a comparable iPad Mini that houses a nearly two-year old processor and one of the lowest resolution displays within the ultra-portable tablet market.

I’m also not the only one that thinks so. Cnet.com, which has never been shy about sharing their love for everything Apple, lists the Nexus 7 as their top holiday gift idea. One guess what it edges out for that top spot.

At a time when consumers are constantly looking for the latest and greatest yet also want to make sure that they’re getting the best bang for their buck, the iPad Mini offers neither. This should scare Apple. Because, the hottest gift idea this holiday season is the tablet, and dollar for dollar, there is no better value in this market right now than the Nexus 7.

But don’t take my word for it. If you’re in the market for a tablet or are considering giving one as a gift this holiday, go take a look for yourself. Go to Best Buy (BBY) or an Apple Store and play with the iPad Mini. Test out the Web browser, watch a YouTube video, peruse through a sample ebook, and play any games preloaded on the display unit. Then do the same with the Nexus 7. Perhaps then you’ll understand why demand for it has been so strong that sales figures to date have even shocked Google, and why the company now plans on shipping 5 million units by yearend -- double its initial estimate. The scary part of all this is that the Nexus 7 represent just one Android ultra-portable tablet. There’s also Amazon’s Kindle Fire HD, Barnes & Noble’s Nook HD, Samsung’s Galaxy Tab line of tablets and numerous others. Again, this is great news for consumers. Not so much for Apple.